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Evaluating the Impact of Land Redistribution: A CGE Microsimulation Application to Zimbabwe

Margaret Chitiga () and Ramos Mabugu
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Margaret Chitiga: Department of Economics, University of Pretoria

Authors registered in the RePEc Author Service: Margaret Mabugu

No 200609, Working Papers from University of Pretoria, Department of Economics

Abstract: Zimbabwe has recently gone through a widely criticised land reform process. The country has suffered immensely as a result of this badly orchestrated reform process. Yet land reform can potentially increase average incomes, improve income distribution and as a consequence reduce poverty. This paper presents a counterfactual picture of what could have happened had land reform been handled differently. The paper uses a computable general equilibrium (CGE) model coupled with a microsimulation model in order to quantify the impact of land redistribution in terms of poverty, inequality and production. This is one of the first attempts to apply such an approach to the study of the impact of land reform on poverty and distribution in the context of an African country. The results for the land reform simulations show that the reform could have had the potential of generating substantial reductions in poverty and inequality in the rural areas. The richer households, however, would have seen a slight reduction in their welfare. The aggregate gains and the distributional effects could have been reinforced if the new resettled farmers had been able to maintain a high intensity of production. What underpin these positive outcomes are the complementary adjustments in the fiscal deficit and external balance, elements that were generally lacking from the way ZimbabweÕs land reform was actually executed. These results tend to suggest that well planned and executed land reforms can still play an important role in reducing poverty and inequality.

Pages: 18 pages
Date: 2006-03
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